What is Mortgage Protection Life Assurance?
- Mortgage Protection Life Assurance is designed to pay off the remaining mortgage debt on repayment mortgages if death occurs within a set period.
- It ensures your dependents needn’t worry about repaying the mortgage in the unfortunate event of death.
- The cover decreases in line with the outstanding mortgage debt (if you have a Capital Repayment mortgage).
Is it worth having?
- We would strongly recommend you start a policy when you take out a mortgage.
- It is essential protection and, if set up correctly, should not be too expensive.
We can research the market and find the most appropriate and cost effective policy for you.
How Much Does It Cost?
- The cost is normally relatively low and normally we would find you the cheapest policy.
- It has no investment element as the payment covers the balance of the mortgage and there’s no argument over whether someone has died.
- Your lifestyle can make the cost of cover cheaper. The amount paid increases with the likelihood of death within the term – age, health, being a smoker and having a risky occupation are all factors which affect the level of premium
- For those who have stopped smoking for more than 1 year, it is worth us obtaining a quote as we may be able to obtain a substantially reduced premium.
Single vs Joint Policies
- Couples can choose either separate policies or joint policies which pay out on the first death.
- A joint policy would only be suitable if you needed the policy to pay out on the first person to die, as the cover would end at that point.
- Unmarried couples taking a life policy should normally choose single policies, especially if no wills are in place.
- Even if a joint policy does look suitable, it’s worth getting quotes for stand alone policies anyway, as it may be cheaper.
Consider Writing in Trust
- If you die, the life assurance payment will form part of your estate, which means that the value of your estate could be liable to Inheritance Tax.
In many cases you can avoid this by writing the policy in trust – which can mean that
- payment(s) goes direct to your dependents, avoiding inheritance tax.
- Payments into trust are normally made quicker as the Insurance company only need sight of the death certificate. There is no need to await the granting of probate.
- Writing a policy in trust is relatively easy as most policies include the option (and papers) for this option at no extra charge.
As IFA’s we can research the market to provide you with the most suitable product available.
The Financial Services Authority does not regulate Inheritance Tax Planning and Trusts.
For more information on mortgage protection contact Kate Beale on:
Tel: 01206 871120
Email: kate@bgafs.co.uk
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